Abstract

The pass-through rules that the US Congress enacted in 2017 - permitting the owners of unincorporated businesses in favored industries to escape tax on 20 per cent of their income - achieved a rare and unenviable trifecta, by making the tax system less efficient, less fair, and more complicated. It lacked any coherent (or even clearly articulated) underlying principle, was shoddily executed, and ought to be promptly repealed. Given the broader surrounding circumstances, the mere fact of its enactment sends out a disturbing message about disregard among high-ranking US policymakers for basic principles of competence, transparency, and fair governance.

Note: This material was first published by Sweet & Maxwell Limited in Daniel Shaviro, Evaluating the New US Pass-Through Rules, Issue 1 of the 2018 British Tax Review, pages 49-67 and is reproduced by agreement with the Publishers.

Shaviro, Daniel, Evaluating the New US Pass-Through Rules (March 15, 2018). British Tax Review, Issue 1, 2018; NYU Law and Economics Research Paper No. 18-08; NYU School of Law, Public Law Research Paper No. 18-25. Available at SSRN: https://ssrn.com/abstract=3141521